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Privacy and GDPR . 21st January 2020

What does Google’s ‘death penalty’ for Third-Party Cookies mean for web publishers?

Google confirms plans to phase out support for Third-Party Cookies in Chrome

Last week, Google announced its highly anticipated plan to banish support for ‘obsolete’ third-party cookies in Chrome by 2022. The change is likely to shake up the online advertising industry who have long relied upon cookies to target and track advertising.

The timeline of events

Amid heightened public concern over data privacy, speculation that Google would soon follow in the footsteps of privacy-centric browsers began last year. Whilst other browsers, such as Apple’s Safari and Mozilla Firefox, have taken a secure-by-default approach, Google has been more collaborative so as to avoid ‘unintended consequences’ for members of the digital advertising industry.

Back in May, Google announced at their IO conference that web developers would soon be required to label third-party cookies in cross-site requests using the SameSite attribute so that Chrome has more control over how these cookies are used. On February 4, 2020, Chrome 80 will limit any cookies without labels to first-party contexts which will have a huge impact on ad tech vendors that rely on third-party cookies.

Justin Schuh, the director of Chrome Engineering has said: “By undermining the business model of many ad-supported websites, blunt approaches to cookies encourage the use of opaque techniques such as fingerprinting (an invasive workaround to replace cookies), which can actually reduce user privacy and control”

In August of last year, Google also published a research paper which investigated the impact that disabling access to third-party cookies would have on the programmatic ad revenue of web publishers. This experiment concluded that the removal of third-party cookies would reduce publishers’ ad revenue by 52%. These results prompted Google’s latest long-term initiative, Privacy Sandbox, which aims to develop a set of open standards for both publishers and advertisers aimed at building a more privacy-centric web for users, whilst also supporting publishers.

The Privacy Sandbox is a place where stakeholders can put forward ideas about how behavioural targeting on the internet could work without the use of third-party cookies. Shaped by the web community, the new privacy standards will aim to safeguard users’ data whilst simultaneously ensuring that web content remains freely accessible.

The third-party cookie crumbles

Looking ahead, the tech giant plans to launch a new set of technical solutions to replace the various functions of third-party cookies and render them as obsolete. A large proportion of the ads shown to users online are targeted using third-party cookies which are part of an infrastructure that tracks and trades personal data.

These new technologies would radically change the way that privacy and ad tracking function on the internet by providing an alternative to third-party cookies without invading the privacy of users. This includes targeting demographics without targeting users directly, making sure that websites’ login infrastructure does not break and helping advertisers understand whether their ads have converted into sales. This will particularly impact advertisers and publishers who depend on the ability to track users across the web.

Schuh has said that support for third-party cookies will only be terminated once the replacement can address the needs of users, publishers and advertisers. This is hoped to be achieved within two years with the help of web publishers, advertising companies and other browser providers.

How will the death of third-party cookies impact publishers?

Unless there is a significant shift in the way that marketers purchase ads in the next two years, it is likely that most publishers will see a drop in revenue.  Our own data shows differences of up to 51% in ad CPMs between browsers, thanks largely to how they choose to support cookies. This is because display ads often rely on the data obtained from cookies in order to target certain users. If this data is taken away, advertisers are not prepared to pay premium prices for untargeted and impersonal ads. Chrome has always been amongst the stronger performing browsers for publishers, but it seems likely this will change over the coming two years. Considering how dominant Chrome is, that is bad news for publishers.

In the future, it is likely that larger, brand publishers will do better in the long term. This is because publishers with a large audience have more opportunity to build and offer targeting to advertisers on first-party audience data. For smaller publishers, this is much harder as they have a smaller audience.

The demise of third-party cookies is also likely to bring a return to more contextual advertising. However, we predict that brand safety concerns will mean that this is done together with brand targeting, which reduces opportunities for smaller advertisers even further. With regards to SSPs, it is likely that these platforms will struggle, or even disappear unless they can break their over-reliance on third-party cookies in the next two years.

In summary…

Though ad tech is likely to experience the most impact, other systems will be affected too. Publishers rely on third-party cookies for a variety of reasons, such as analytics, social resharing and live chat. Whilst systems such as Google Analytics are likely to find a workaround, third-party scripts from smaller producers may not respond as quickly.

Privacy and GDPR . Tips

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  • Google Certified Publishing Partners
  • Header Bidding
  • Open Bidding
  • Privacy & GDPR
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